Construction is one of the most resource-hungry industries on the planet. It consumes vast amounts of raw materials, generates enormous waste, and accounts for 37% of global carbon emissions. The traditional approach — extracting materials, using them, and then discarding them — is no longer sustainable. But what if buildings could be designed to last longer, be disassembled more easily, and reused instead of demolished?
This is the vision of circular construction, a model that aims to keep building materials in use for as long as possible, reducing waste and lowering costs. However, while the environmental benefits are widely recognised, the economic and financial aspects of circular construction remain poorly understood. A new study from Vrije Universiteit Amsterdam and Delft University of Technology, in the Netherlands [52.3°N, 4.9°E] has developed a framework to assess the real economic potential of circular construction — and the results could transform the way we build in both Northern Europe and Canada.
Circular Construction — A More Profitable Model?
Many people assume that circular construction is more expensive than traditional building methods. After all, reclaiming and reusing materials requires extra labour, new logistics, and different financial models. However, this study challenges that assumption, showing that with the right strategies, circular construction can be not just sustainable, but also more economically viable.
The research identifies four key economic aspects that determine whether circular construction succeeds or fails:
- How costs are assessed — Traditional cost models fail to capture the long-term financial benefits of circularity. A lifecycle approach is needed to properly compare circular and linear construction.
- Benefits, barriers, and risks — While high upfront costs remain a challenge, policy incentives, reduced waste disposal fees, and future material value make circular construction a smarter long-term investment.
- Market forces — Circular construction relies on a functioning market for reclaimed materials, which is still underdeveloped in many regions.
- Business models — Shifting from ownership to leasing models, material passports, and take-back schemes could make circular construction more financially attractive.
Wealthy Nations Needn’t Spend Excess Money on Building
Northern Europe is already a leader in circular construction, with the Netherlands, Sweden, and Denmark setting ambitious circular economy targets. However, even in these countries, the market for secondary building materials remains fragmented and the financial case for circularity is not always clear.
In Canada, the challenge is even greater. The country generates over 4 million tonnes of construction waste annually, and landfill space is running out in key urban centres. Circular construction could significantly reduce waste, lower material costs, and create new business opportunities — but financial models and supply chains need to evolve.
The study highlights a key issue affecting both regions: the cost of circular materials is often higher than virgin materials because market systems still favour extraction over reuse. This means that government policies — such as lower taxes on reclaimed materials, higher landfill levies, and public procurement rules favouring circular design — will be crucial to making circular construction the default.
How to Make Circular Construction Work?
To make circular construction financially viable, the study identifies several strategies:
- Tax incentives and subsidies — Lowering costs for companies that use reclaimed materials and circular building techniques.
- New procurement rules — Governments and municipalities must lead by example, requiring circular materials in public buildings.
- Investment in deconstruction over demolition — Shifting from wasteful demolition to planned deconstruction, ensuring materials can be recovered and reused.
- Financial models that capture long-term value — Banks and investors need to recognise the resale value of circular materials and the cost savings from reduced landfill fees.
A Smarter Way to Build
The shift to circular construction is no longer a question of “if” but “how fast”. With natural resources depleting and landfill space shrinking, Northern nations must rethink how they build. This study provides the missing piece of the puzzle: proof that circular construction can be economically competitive — if markets, policies, and financial models adapt.
The construction industry is at a crossroads. The buildings we construct today must be designed for tomorrow — not as waste, but as valuable resources for the future.
Source
Nouman Khadim, Alfons van Marrewijk, Circles of Profit: A Conceptual Framework for Economic and Financial Aspects in Circular Construction, Sustainable Production and Consumption, 2025-03-07
Boˆreal 